Credit Suisse swings to massive loss after write down

Swiss bank’s results are the first to reflect changes made under CEO Tidjane Thiam

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By

JohnLetzing

Credit Suisse Group AG reported a massive fourth-quarter loss on Thursday as the Swiss bank wrote down the value of an ill-fated U.S. acquisition and undertook a comprehensive retooling that will cut its reliance on investment banking.

The Zurich-based bank
CSGN, +2.10%CS, +1.08%
said its net loss in the period was 5.83 billion Swiss francs ($5.8 billion) compared with a net profit of 691 million francs in the same quarter a year earlier. Net revenue fell 34% to 4.2 billion francs, the bank said.

Credit Suisse also said it plans to ramp up a cost savings program, and will cut about 4,000 jobs, including contractors and consultants.

Credit Suisse had previously disclosed it would include a significant goodwill impairment charge in its fourth-quarter results, stemming from the bank’s restructuring, which would lead to a significant loss. However, the results still fell below analyst expectations of a loss of 4.97 billion francs and 4.85 billion francs in net revenue.

The goodwill impairment charge of 3.8 billion francs is primarily related to its acquisition in 2000 of U.S. investment bank Donaldson, Lufkin & Jenrette for $11.5 billion—a move that was intended to help the Swiss bank vie with Wall Street’s biggest firms.

More recently, however, Credit Suisse has sought to de-emphasize investment bank in favor of a sharper focus on wealth management.

The latest results are the first to reflect Credit Suisse’s new structure under Chief Executive Tidjane Thiam, who took over in July and announced his strategic plans for the bank in October. Those plans include bolstering wealth management, particularly in regions such as Asia, while reducing the resources it directs to its investment bank.

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